TDS for Self-employed Individuals

TDS deduction on fixed deposits (FD) occurs when the interest earned on an FD exceeds Rs.40,000 in a financial year. In such cases, banks automatically deduct 10% TDS (Tax Deducted at Source) from the interest. For instance, if the interest is Rs.45,000, the bank deducts Rs.4,500 as TDS, and you would ideally receive Rs.40,500. The deducted TDS is sent to the income tax department. If your total income is below the taxable limit, you could claim a refund by filing an income tax return. Understanding TDS on FD is crucial for effective financial planning.

Section 194C of the Income Tax Act, 1961 mandates TDS deduction on payments to resident contractors or subcontractors by entities like governments, companies, and co-operative societies. The 'work' includes activities like broadcasting, advertising, and catering. TDS rates under Section 194C are 1% for individuals/HUFs and 2% for other entities, with a 20% rate if the PAN is not provided. TDS must be deducted if a single payment exceeds Rs.30,000 or total payments in a year exceed Rs.75,000. Timely TDS deposit is essential to avoid complications. Understanding 194C TDS rates and deduction rules could ensure compliance and avoid future issues.